Pratt pleads sainthood. Richard Pratt came out swinging yesterday, with the cardboard baron’s legal team accusing the ACCC of entrapping the billionaire through an “egregious abuse of process”. You have to admire the brazenness of Pratt’s lawyers, who claimed that the man who was head of a company which admitted to conducting the largest ever cartel was “an honoured and honourable Australian”. You could be forgiven for thinking that Pratt’s company, Visy, has spent the last two decades building schools for orphans in Rwanda, rather than conspiring with its major competitor to inflate the price of cardboard boxes to the tune of several hundred million dollars.
Pratt’s lead counsel, Robert Richter QC (the man who managed to get John Elliott off on a technicality and helped Steve Vizard escape criminal sanctions) told the Federal Court yesterday that “this has been a strategy and stratagem that is a shameful abuse of process and it was in contemplation from early on…to play fair, the ACCC should have brought the criminal charges together with the civil cartel case so that Mr Pratt could have seen what was coming.”
While Pratt is within his rights to feel somewhat annoyed by the ACCC’s tactics, the blame should not be cast on the ACCC, which is simply fulfilling its mandate, but rather, Pratt’s all-star legal team (which included one of the country best defense practitioners, ABL’s Leon Zwier) for not including immunity from criminal prosecution in his original deal. The matter returns to court on August 12. — Adam Schwab
Kill people, get money. Simple really. In this year’s Fortune 500, the business rag produced an interesting fact when it noted the best stock in the first ever Fortune 500. While high-fliers like Berkshire Hathaway, Microsoft and Google were not around in 1954 (when it was published) and would be ineligible, the best performed company in the last 54 years is none other than Altria, which is better known as Phillip Morris (the cigarette company which for a period, also owned Kraft). That’s right, a company whose major product has the direct result of killing its clients has turned a $1,000 investment into $15.5 million today. Take that ethical investors. — Adam Schwab
iPods are the new Big Mac. Since 1986, the “Big Mac” index (produced by the Economist magazine) has been the benchmark for determining purchase-price-parity. The more expensive the Big Mac, the more expensive a country is generally in relative terms. However, the Economist replaced the Big Mac index last January with the iPod index – the hi-tech equivalent of the burger. The Financial Review reported today Australia “slipped six places on the index in the past three months to rank as the 14th cheapest place on the planet to buy an iPod.”
CommSec chief economist, Craig James, had a common-sense interpretation of the drop, claiming that “Australia’s slip down the leadership board is not because the local price of the iconic music player has gone up or even because prices have fallen markedly overseas…it’s because the Australian dollar has strengthened.”
What does the result mean? Nothing that wasn’t obvious to many Australians already. That imports, including overseas travel, are a lot cheaper thanks to demand for Australian dollars increasing (largely due to the world’s hunger for Australia’s commodities and our relatively high interest rates). You can buy a book on Amazon and have it delivered for around two-thirds of the cost of the same book locally. Moreover, the relative-pricing makes James Packer’s purchase of MFS Living’s ski assets seem somewhat surprising. Why would anyone ski in 40 centimeters of Australian “snow” where it costs US$89 for a one-day ski pass for Falls Creek, compared with US$48 for a one-day ski pass at Japan’s Niseko resort? — Adam Schwab
Suppression of bank payments festers for eBay. Confusion and anger continues to rain down on eBay Australia from its own devotees. eBay discussion boards are full of sellers not wanting to have to offer PayPal if they don’t choose to. That change was introduced by eBay on 21 May as the first part of the now abandoned project to make eBay.com.au a marketplace where PayPal was the only acceptable payment mechanism (either in its own right, or with PayPal acting as gateway for a credit card payment).
eBay last week announced that it was withdrawing its notification to the ACCC requesting immunity from prosecution under section 47 of the Trade Practices Act. It also announced that the second part of the project was no longer going to proceed. Merchants selling goods on eBay must still, however, offer PayPal as an alternative. According to numerous users on eBay and external discussion boards, the company is actively deleting listings that state that direct deposit to a bank account is the preferred means of payment. This does not mean that direct deposit is no longer a payment option available through eBay but rather that listings are no longer practical that make this payment preference clear.
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Whether promoting PayPal and suppressing an alternative creates any issues under trades practices law is now the subject of a lively new debate among eBay’s clients. Competition policy expert, Julie Clarke from the Deakin University Law School, says if those claims are true, eBay/PayPal could face action.
“If enforcing a preferred payment method onto sellers could be shown to have the effect of substantially lessening competition by effectively substantially excluding other options, that would come under the reach of [section] 47. They could still face action anyway conceivably from other parties seeking an injunction, if they could show that the part one changes substantially lessened competition,” said Clarke. “But you would think that would be a difficult task. Difficult, but possible if these other things are happening as well that discourage other payment options.” — The Sheet